Detroit Free Press: Jeff Stoltman on the early success and stability of StockX

Can a Detroit-based startup founded just three years ago and with no profits really be worth a billion dollars? That's the story of StockX, the sneaker exchange and fine goods marketplace co-founded by businessman Dan Gilbert. A recent report in the market journal Recode reports that major investors are ready to put big money into StockX, giving the young firm a $1 billion valuation or "unicorn" status. There are an estimated 150 or so unicorn firms in the United States, but not so many in this part of the country. StockX would mark the third time in the past couple of years that a Southeast Michigan startup firm has reached that lofty status. Those with longer memories remember the doc.com bust of a generation ago, when multiple promising startups grew fast but flamed out almost as quickly. But while other unicorn startups collapsed in spectacular fashion, Jeff Stoltman, a business professor at Wayne State University, said StockX appears to be on more solid ground. "It doesn't look like a flawed market," Stoltman said. "They've pretty much established that the marketplace is there. So market risk doesn't seem to be there. I don't see regulatory risk. The competitive risk doesn't look to be all that significant. I don't really see the risk factors." Stoltman cites estimates that 80 percent of today's unicorn startups get to the point of an initial public stock offering before showing any profits. "There's obviously something going on here that extends well beyond profit," he said. Rather, investors are looking at other signals, including the depth of the demand market and the ingenuity of the business model. "This is not a magic box," Stoltman said. "This is a proven model. The fundamentals are there to get to profitability."